Asking what happens to your book royalties after you die might seem like a very morbid question, but it is one that I’ve been asked several times recently. So I asked for some advice from a colleague of mine, Grant Notman from Kept Assets, who specializes in estate preservation and bloodline planning, and here is what he had to say…
Book royalties can be a significant sum of money over time and maybe something that you need to consider when writing your Will. Many writers have seen their books gain in popularity post their death so the first thing you need to make sure of is that your royalties continue to be paid after your passing (probably not what you were thinking when you signed up but worth checking into). Once you know you have continued royalties post-death here are a few things you may wish to consider.
Lasting Power of Attorney
If your royalty payments are currently significant then it is likely that you have already established a limited company where those royalty payments are made to. If you have then the first thing you need to consider is putting in place a Business Lasting Power of Attorney (LPA) so that should you fall ill but not pass away you have selected the best person you know to manage your royalties until you recover. A business LPA is different from a personal LPA because the people you would select to run your business may be completely different as you are looking for people with Business skills not a personal connection to you.
Very clearly you still have to trust these people but you need to recognize that often your chosen partner is not always fully equipped to run your business and make the decisions needed to ensure when you recover there is still a business to return to. Your partner can, of course, be one of your Attorneys but if they don’t have the specific skills you are looking for you can include others who do.
Having protected your royalties while you are still alive it is a simple case of getting a Business Clause included in you Will so you can make specific decisions about who is to benefit from your business upon your death.
Businesses pass Inherence Tax-free between family members so unless you are looking to pass the business outside the family you will not need to establish a specific trust for the Business. If you are leaving the Business to a non-family member then you would be wise to get the business passed into a trust so that is can benefit from the most advantageous tax position at the time of your passing. Depending on the size of your business and your plans for it on your passing there are a variety of options available.
If your book royalties are currently not significant enough for you to have already set up a company to manage them but you still wish to leave them to somebody you can include detailed instructions to your Executors in your Memorandum of Wishes (MoW) (document that sits alongside your Will) as to how they should be handled. It is worth noting that MoW’s are primarily designed for Goods and Chattels so your instructions will need to be very clear about how this should be handled.
It is worth considering that although royalty payments may be low today, they could increase over time. So, it may be sensible to look at setting up a company to handle that eventuality and then updating your Will as already described.
With a little help from Kept Assets Limited you can plan your estate to provide for the three main factors that can affect your intended outcomes:
Ensuring you can enjoy your assets and that they cannot be taken away from you whilst you live, perhaps in the event of divorce or the requirement for long term care.
Keeping faith with your intentions where you have bequeathed assets, items or money to specific groups, individuals or charities.
Working within the law to reduce the effect of taxation on your estate assets as they pass down to your beneficiaries and, where applicable, future generations.
Why not call today on 01635 959111 or email email@example.com
Want to make sure that you are publishing your book in such a way to get the maximum book royalties to begin with? Download my FREE “How to Self-Publish in 12 Easy Steps” eBook HERE.
And don’t forget to sign up to be the first to hear about new blogs and special offers